Now Branson faces failure on rail franchise

Sir Richard Branson's ambitions to expand his Virgin Rail group by acquiring the franchise for the east coast main line route is reportedly facing failure.

The Shadow Strategic Rail Authority, which awards rail franchises, is recommending that the government choose the rival bid, from the line's current operator, Great North Eastern railway, in preference to the joint approach from Virgin and Stagecoach, according to the Financial Times.

Yesterday the SSRA said it had made a decision over which of the two bids should be granted the new 20-year franchise for the high-speed route between London and Edinburgh but declined to comment further. "We have made a decision, that decision is with the government," said a SSRA spokesman.

Ministers are expected to finalise their preference next month and are thought unlikely to overturn the SSRA's decision even though they have the power to do so.

Virgin already runs the west coast main line route as well as CrossCountry lines, and its acquisition of the third route would be expected to raise competition considerations.

"It is not so much the number of franchises one holds, but about how the network is run, because if Virgin were to get the franchise, it would cut down consumers' choice of rail travel to Scotland," according to one industry source.

Virgin, however, argues that the two coast routes are complementary and rival methods of transport such as air and road should be taken into account when considering competition issues.

Yesterday Virgin said the final decision on the franchise had yet to be taken and was still hopeful the bid would succeed.

"We think we have put in the best bid. The east coast main line requires a great deal of investment which we are offering."

Earlier this week the Lottery Commission awarded the licence to run the national lottery to Camelot - a decision which handed Sir Richard what he described as "the worst failure" of his business life.